Suppose Chef City manufactures cast iron skillets.. One model is a 10-inch skillet that sells for $26. Chef City projects sales of 650 10-inch skillets per month.The production costs are $8 per skillet for direct materials, $2 per skillet for direct labor, and $1 per skillet for manufacturing overhead Chef City has 70 10 inchskillets in inventory at the beginning of July but wants to have an ending inventory equal to 40% of the next month's sales. Selling and administrative expensesfor this product line are $1,900 per month. Chef City is budgeted to produce 840 skillets in JulyCompute the total amount budgeted for product costs for JulyO A. $10,010O B. $9,800OC. $9,240O D. $7,150

Solution: Introduction: The Budgetary Control System is one of the Planning and Control tools for budget. Planning will decide if the company will succeed or not. How well the planning is done will tell the success of a company. Under this system, Budgeted numbers are compared with the actual numbers. It seems that the fixed budgeted numbers are compared with actual budgeted numbers without flexing it. A budget is an estimation or a financial plan for a defined period, usually one year. It may also include expected revenue, costs and expenses estimations and planned sales volume and assets, liabilities and cash flows. Direct labor budget reveals that total expected costs for direct labor and number of direct labor hours required for production. It helps the management to estimate its labor force requirements for production. Manufacturing Overhead budget includes total manufacturing costs incurred except raw materials and direct labor costs of manufacturing companies during the fiscal year. This can include some variable and fixed components also. Selling and administrative expense budget is a budgeted operating expenses part of a company's planned profit and loss proforma. It doesn't include direct costs of manufacturing. Analysis and Calculation: In the instant case, Chef City budgeted to produce 840 10-inch skillets per month and their production costs are $8 per skillets for direct material, $2 per skillets for direct labor and $1 per skillets for manufacturing overheads. Therefore, total product cost per skillet is $11. ($8+$2+$1). So Total amount budgeted to product cost is multiplied by Total Skillets per month with Cost per skillet. Total amount budgeted to product cost = 840 skillets * $11 per skillet = $9,240 Total amount budgeted to product cost is $9,240. Therefore, Option (c) is Correct.

Business

Accounting

Suppose Chef City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $26. Chef City projects sales of 650 10-inch skillets per month The production costs are $8 per skillet for direct materials, $2 per skillet for direct labor, and $1 per skilletE for manufacturing overhead Chef City has 7O 10 in skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40% of the next month's sales. Selling and administrative expens for this product line are $1,900 per month. Chef City is budgeted to produce 840 skillets inJuly Compute the total amount budgeted for product costs for July O A. $10,01O O B. $9,800 OC. $9,240 O D. $7,150

Suppose Chef City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $26. Chef City projects sales of 650 10-inch skillets per month The production costs are $8 per skillet for direct materials, $2 per skillet for direct labor, and $1 per skilletE for manufacturing overhead Chef City has 7O 10 in skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40% of the next month's sales. Selling and administrative expens for this product line are $1,900 per month. Chef City is budgeted to produce 840 skillets inJuly Compute the total amount budgeted for product costs for July O A. $10,01O O B. $9,800 OC. $9,240 O D. $7,150

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Li Company manufactures a product requiring 2 pounds of raw material for each finished unit. Raw materials inventory had a balance of on March 1 was 7,000 pounds. The company wants to maintain an ending inventory equal to 40% of the next month’s production needs. Production for March and April is projected to be 4,000 and 5,000 units, respectively. How many pounds of raw material must be purchased in March?
Haresh
Next year Lowry, Inc. expects to sell 30,000 athletic uniforms for $80 each. Fabric costs $20 a yard, and it takes 1 yard to make a uniform. Direct manufacturing labor is $8 per uniform, and manufacturing overhead is $6 for each uniform. The following target inventory levels apply next year: Fabric Beginning inventory 12,000 yards Ending inventory 9,000 yards Work-in-process inventory O units 0 units Finished goods inventory_ 6,000 units 5,000 units What dollar amount would Lowry budget for direct material (DM) purchases next year?
keep costs down, CGC maintains a warehouse but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year: 1. Expected monthly sales for April, May, June, and July are $180,000, $150,000, $270,000, and $50,000, respectively. 2. Cost of goods sold is 45 percent of expected sales. 3. CGC's desired ending inventory is 55 percent of the following month's cost of goods sold. 4. Monthly operating expenses are estimated to be: . Salaries: $33,000. ° Delivery expense: 8 percent of monthly sales. • Rent expense on the warehouse: $2,500. • Utilities: $500. • Insurance: $330. • Other expenses: $430. Required: 1. Compute the budgeted cost of purchases for each month in the second quarter. 2. Complete the budgeted income statement for each month in the second quarter. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the budgeted cost of purchases for each month in the second quarter. Total Cost of…
Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month’s sales. Ending direct materials inventory should be 30 percent of next month’s production. Expected unit sales (frames) for the upcoming months follow: March 280 April 260 May 310 June 410 July 385 August 435 Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,800 ($650 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $700 per month plus $0.50 per unit sold. Iguana, Inc., had $10,900 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit…
GreenThumb Organic Fertilizer Company plans to sell 210,000 units of finished product in July and anticipates a growth rate in sales of 3 percent per month. The desired monthly ending inventory in units of finished product is 85 percent of the next month's estimated sales. There are 178,500 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of raw material at a cost of $1.25 per pound. There are 840,000 pounds of raw material in inventory on June 30. Required: 1. Compute the company's total required production in units of finished product for the entire three-month period ending September 30. Note: Round all intermediate calculations and your final answer to the nearest unit. 2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three-month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in…
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $14 per hour. Iguana has the following inventory policies: • Ending finished goods inventory should be 40 percent of next month's sales. Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May June July August 315 330 380 480 455 505 Variable manufacturing overhead is incurred at a rate of $0.60 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold. Iguana, Inc., had $11,000 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is…
Shadee Corporation expects to sell 610 sun shades in May and 340 in June. Each shade sells for $140. Shadee's beginning and ending finished goods inventories for May are 70 and 50 shades, respectively. Ending finished goods inventory for June will be 65 shades. Each shade requires a total of $50.00 in direct materials that includes 4 adjustable poles that cost $10.00 each. Shadee expects to have 120 in direct materials inventory on May 1, 90 poles in inventory on May 31, and 110 poles in inventory on June 30. Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $12 per hour.. Additionally, Shadee's fixed manufacturing overhead is $9,000 per month, and variable manufacturing overhead is $14 per unit produced. Use the information and solutions presented to complete the requirements. Required: Determine Shadee's budgeted manufacturing cost per shade. (Note: Assume that fixed overhead per unit is $ 14.) Prepare Shadee's budgeted cost of…
King purchases two components for its primary product. They need 3 of Component A and 2 of Component B for each unit of the primary product. Component A costs $3; Component B costs $5. Other facts: Forecasted Primary Product Production: January: 19,500 units February: 19,600 units March: 23,000 units April: 27,000 units Ending component inventory should equal 20% of next month’s production needs. Assume December’s ending inventory met this requirement. Calculate purchases for both Components in both units and dollars by month for Q1.
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs: Direct materials ? Direct labor $71,000 Variable overhead 19,000 Fixed overhead 180,000 Next year, Pietro expects to purchase $122,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $7,000 $11,700 Ending $6,900 $13,700 Required: Question Content Area 1. Prepare a statement of cost of goods manufactured. Pietro Frozen Foods, Inc. Statement of Cost of Goods Manufactured For the Coming Year Direct materials $- Select - - Select - Materials available $fill in the blank 518a60ff502205f_5 - Select - Direct materials used in production $fill in the blank 518a60ff502205f_8 - Select - - Select - Total manufacturing costs added $fill in the blank 518a60ff502205f_13 - Select - - Select - Cost of goods…